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- Jul 10, 2008
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There are only a few ways to grow a country’s GDP. Thefirst is by population expansion, which is what the Singapore government hasembarked on very aggressively in recent years. The second is by innovation andincreases in productivity, which has been lagging behind due to neglect. Thethird is by increased government spending, which only works in the short term,produces mixed results and is not sustainable.
<o:p
To put it simply, the government wants to grow the GDP inthe short run by increasing the workforce, and to ensure continued economicgrowth in the long run by having foreigners work and settle here, with many ofthem eventually taking up citizenship.
But that is only one way to grow the economy. How aboutinnovation and productivity? Sadly, that has been lagging for the past decadeor so. Singapore seems to have lost the creative edge. Our high-endmanufacturing is down in the dumps, as is our biotech sector. The workforce isnot working more efficiently and effectively. What has happened here?
My take is that the large supply of cheap labour hasinduced companies to take the easy way out. They would rather cut costs andhire increasing amounts of cheap manpower than invest in innovativetechnologies or devote resources to finding ways to do things better and moreefficiently.
The supply of cheap labour has been like a drug that haslured our companies, especially our Government-Linked Corporations (GLCs), intocomplacency and false sense of security. It has extinguished their drive toexcel, innovate and become more creative.
<o:p Just using population expansion to grow our GDP is adangerous policy. In Singapore’s case, this policy will eventually hit aroad-block some years down the road when the carrying capacity of our countryhas reached its natural limit.
<o:p Already, people are complaining of congestion andovercrowding. Train breakdowns have become more frequent and severe. Theinfrastructure of the country seems to be sagging under the severe stress ofthe rapidly expanding population. Yet the government tells us that the only wayforward is to expand our numbers even more.
<o:p PM Lee has admitted that his government does not have20/20 foresight. This is a very serious admission. His ruling party knew fullywell that they were going to embark on an aggressive policy of populationexpansion. Yet they did not have the basic common sense of building essentialinfrastructure like roads and train routes, opening up land for development,building new hospitals, and increasing the supply of property ahead of scheduleso that the country can accommodate all the newcomers.
<o:p PM Lee has essentially admitted that they have governedthe country incompetently for the past decade. We are now suffering the effectsof this mismanagement. And the government has told us that more is yet to come.
<o:p Even if our infrastructural development catches up withthe population, there will still come a time when we cannot reclaim any moreland, and the population has become too dense to expand any further no matterhow many roads we build, no matter how many train routes we add, no matter howmany flats and skyscrapers we put on the market.
<o:p What would happen then? Twenty years down the road, whenthis day finally comes, what will the PAP government tell us? How will the PAPlead the country further into the 21st century when the end-game is already insight for astute observers? Can the PAP devise a new, creative way to remakeSingapore? The PAP cannot even do basic planning of infrastructure developmentahead of time, much less devise an ingenious plan for a Singapore that issaturated to the brim with people!
<o:p To round up this article, a final point needs to be made.GDP growth is only one measure of economic success of a country, albeit animportant one. In recent years, we have seen that the poor and lower middleclasses have not caught up despite GDP growth. This has resulted in wideningincome inequality and sets the stage for increased social frictions. A wideningincome gap is also bad for the economy in the long run because it puts adampener on domestic consumption.
<o:p The PAP has clearly embraced Ronald Reagan’s “trickledown economics”. But will a rising tide really lift all boats? In thisglobalized environment, there is less and less evidence to lend support forthis style of economics. By perpetually hiring cheap foreign labour andoutsourcing local operations, the wealthy elite can ensure that the economicgoods earned at the top don’t trickle down to the man far down below.
<o:p The government can give all kinds of budget handouts andhousehold relief packages to the lower income families, but these are juststop-gap measures that won’t improve their overall quality of life, if theirincomes continue to remain stagnant and they keep facing unfair and increasingcompetition from foreigners.
There is a need to look beyond GDP growth, and addressthe very way our economy has been structured, especially its liberalimmigration, manpower, and cheap foreign labour policies. And because thecarrying capacity of our island is very limited, there is a need to tackle theunderlying assumption that unbridled population expansion is the way to go.</o</o</o</o</o</o</o</o</o</o
<o:p
To put it simply, the government wants to grow the GDP inthe short run by increasing the workforce, and to ensure continued economicgrowth in the long run by having foreigners work and settle here, with many ofthem eventually taking up citizenship.
But that is only one way to grow the economy. How aboutinnovation and productivity? Sadly, that has been lagging for the past decadeor so. Singapore seems to have lost the creative edge. Our high-endmanufacturing is down in the dumps, as is our biotech sector. The workforce isnot working more efficiently and effectively. What has happened here?
My take is that the large supply of cheap labour hasinduced companies to take the easy way out. They would rather cut costs andhire increasing amounts of cheap manpower than invest in innovativetechnologies or devote resources to finding ways to do things better and moreefficiently.
The supply of cheap labour has been like a drug that haslured our companies, especially our Government-Linked Corporations (GLCs), intocomplacency and false sense of security. It has extinguished their drive toexcel, innovate and become more creative.
<o:p Just using population expansion to grow our GDP is adangerous policy. In Singapore’s case, this policy will eventually hit aroad-block some years down the road when the carrying capacity of our countryhas reached its natural limit.
<o:p Already, people are complaining of congestion andovercrowding. Train breakdowns have become more frequent and severe. Theinfrastructure of the country seems to be sagging under the severe stress ofthe rapidly expanding population. Yet the government tells us that the only wayforward is to expand our numbers even more.
<o:p PM Lee has admitted that his government does not have20/20 foresight. This is a very serious admission. His ruling party knew fullywell that they were going to embark on an aggressive policy of populationexpansion. Yet they did not have the basic common sense of building essentialinfrastructure like roads and train routes, opening up land for development,building new hospitals, and increasing the supply of property ahead of scheduleso that the country can accommodate all the newcomers.
<o:p PM Lee has essentially admitted that they have governedthe country incompetently for the past decade. We are now suffering the effectsof this mismanagement. And the government has told us that more is yet to come.
<o:p Even if our infrastructural development catches up withthe population, there will still come a time when we cannot reclaim any moreland, and the population has become too dense to expand any further no matterhow many roads we build, no matter how many train routes we add, no matter howmany flats and skyscrapers we put on the market.
<o:p What would happen then? Twenty years down the road, whenthis day finally comes, what will the PAP government tell us? How will the PAPlead the country further into the 21st century when the end-game is already insight for astute observers? Can the PAP devise a new, creative way to remakeSingapore? The PAP cannot even do basic planning of infrastructure developmentahead of time, much less devise an ingenious plan for a Singapore that issaturated to the brim with people!
<o:p To round up this article, a final point needs to be made.GDP growth is only one measure of economic success of a country, albeit animportant one. In recent years, we have seen that the poor and lower middleclasses have not caught up despite GDP growth. This has resulted in wideningincome inequality and sets the stage for increased social frictions. A wideningincome gap is also bad for the economy in the long run because it puts adampener on domestic consumption.
<o:p The PAP has clearly embraced Ronald Reagan’s “trickledown economics”. But will a rising tide really lift all boats? In thisglobalized environment, there is less and less evidence to lend support forthis style of economics. By perpetually hiring cheap foreign labour andoutsourcing local operations, the wealthy elite can ensure that the economicgoods earned at the top don’t trickle down to the man far down below.
<o:p The government can give all kinds of budget handouts andhousehold relief packages to the lower income families, but these are juststop-gap measures that won’t improve their overall quality of life, if theirincomes continue to remain stagnant and they keep facing unfair and increasingcompetition from foreigners.
There is a need to look beyond GDP growth, and addressthe very way our economy has been structured, especially its liberalimmigration, manpower, and cheap foreign labour policies. And because thecarrying capacity of our island is very limited, there is a need to tackle theunderlying assumption that unbridled population expansion is the way to go.</o</o</o</o</o</o</o</o</o</o
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